The Centers for Medicare and Medicaid Services recently announced that the maximum settlement amount for use of the Fixed Percentage Option will increase from $5,000 to $10,000, effective 10/2/2023. The Fixed Percentage Option is available to the claimant in a liability settlement and allows them to agree to pay 25% of the total settlement amount to resolve Medicare’s recovery claim for conditional payments.  The criteria for selecting this option are:

• Your liability insurance (including self-insurance) settlement, judgment, award or other payment is related to an alleged physical trauma-based incident and;
• The total settlement is for $5,000 (Note this amount will be raised to $10,000, effective October 2, 2023) or less.
• You elect the option within the required timeframe and Medicare has not issued a demand letter or other request for reimbursement related to the incident.
• You have not received and do not expect to receive any other settlements, judgments, awards, or other payments related to the incident.

This option benefits the injured person when Medicare conditional payments exceed 25% of the total settlement amount.  For example, if Medicare has made conditional payments of $8,000 on a $10,000 total settlement, the claimant would pay only $2,500 to resolve them with the Fixed Percentage Option. On the other hand, if conditional payments are $800 on a $10,000 settlement, it is better to use the traditional repayment method with a proportional reduction for attorney’s fees and costs, if any.

Accordingly, it is essential for claimants and their attorneys to investigate Medicare conditional payments prior to settlement so that they can choose the best method for resolving Medicare’s interests.

More information on the Fixed Percentage Option can be found on the CMS website here.

Please contact Tower’s Chief Compliance Officer, Dan Anders, at daniel.anders@towermsa.com with any questions.